A pragmatic deal

Thursday

Feb 20, 2014 at 12:01 AM

It is sad to see the 2011 pension reform fraying. Championed by General Treasurer Gina Raimondo, it has been held up as a model for states that also confront crushing and unsustainable costs. The reform...

It is sad to see the 2011 pension reform fraying. Championed by General Treasurer Gina Raimondo, it has been held up as a model for states that also confront crushing and unsustainable costs. The reform carefully balanced taxpayers’ ability to pay with the need to preserve generous pensions for public employees. House Speaker Gordon Fox and Senate President Teresa Paiva Weed showed admirable courage in steering the reform through the chamber in the face of threats by special interests.

There was a problem, though. The public-employee unions sued, and nobody knew for certain whether Rhode Island courts would side with the public’s right to self-government, including the power to adjust government spending to reflect changing demographics and the ability to pay for past promises. Though the state seems to have a strong case, it would be devastated financially and economically — with little hope of recovery in our lifetimes — should the court rule against it.

Thus, Ms. Raimondo, running for governor, and Gov. Lincoln Chafee have approved a secretly negotiated agreement with union officials in hopes of staving off that catastrophe. Essentially, they agreed with unions to force the public to plow millions of dollars more into already generous public-employee pensions. That means higher taxes and/or less money for vital services. But that was an endurable price, they concluded, to make the threat of outright disaster go away.

‘‘This is a very good deal for the people in the pension system and the people of Rhode Island,” said Ms. Raimondo.

By her calculations, the deal preserves about 94 percent of the savings in the existing pension law. That means pension spending would still be slashed by almost $4 billion, staving off unsustainable costs that would virtually strangle the state’s economy, drive away taxpayers and ruin the lifelong investments of citizens.

In our view, a deal that preserves 94 percent of the savings while removing the threat of losing them all is a reasonable one, however painful. We will, of course, continue to study the details.

For now, all this remains highly speculative. Any deal to cancel the unions’ lawsuit would have to be approved by union members and the General Assembly.

Both Speaker Fox and President Paiva Weed have seemed distinctly displeased that, after expending vast amounts of political capital to win reform, the goalposts have been moved. Leaders of cities and towns, meanwhile, are screaming about the projected cost of the deal to their citizens, who already pay some of the highest property taxes in the country and, in many cases, enjoy far less lucrative retirement benefits than those of the public employees they are forced to support. And others could sue.

Still, we hope that the deal goes through, offering citizens some security from an even worse outcome. Getting 94 percent — even though the state is struggling mightily to afford the 100 percent — is a pragmatic compromise that recognizes taxpayers must make their way through the political and legal minefield of Rhode Island.